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Rate Maintenance <br /> In the Enterprise General Ordinance, the City covenants,among other things, prescribe, <br /> revise and collect fair and reasonable rates,fees and charges for use of the System which: (1) <br /> shall produce Income sufficient,together with any other moneys legally available therefor <br /> and credited to the Income Account, to make the payments and accumulations required by <br /> the Ordinances,and (2)shall produce Net Pledged Revenues in each ensuing Fiscal Year at <br /> least equal to the sum of 120% of the Combined Annual Debt Service Requirements of all <br /> Outstanding First-Lien Revenue Obligations and 105% of the Combined Annual Debt <br /> Service Requirements of all Outstanding Subordinate Revenue Obligations,plus any <br /> amount required to meet then existing deficiencies pertaining to any fund or account <br /> relating to the Net Pledged Revenues or any securities payable therefrom.For purposes of <br /> compliance with the Enterprise General Ordinance,including the Rate Maintenance <br /> Covenant,any funds contributed to the System by the City may be counted as Income. <br /> Additional Obligations <br /> Additional Obligations may be issued,subject to certain provisions of the Ordinances. <br /> Additional First-Lien Revenue Obligations may be issued provided that,at the time of their <br /> issuance: (1) the City is not in default under the provisions of the Ordinances,and (2) the <br /> Net Pledged Revenues for the last complete Fiscal Year or any twelve consecutive whole <br /> months out of the last eighteen prior to the issuance of the proposed Additional First-Lien <br /> Revenue Obligations,as certified by the City Manager or a Consulting Engineer or <br /> Independent Accountant,were at least equal to 120% of the Maximum Annual Debt Service <br /> Requirements of the First-Lien Revenue Obligations then Outstanding and the Additional <br /> First-Lien Revenue Obligations proposed to be issued. If any adjustment in System rates or <br /> fees is to be effective during or prior to any Fiscal Year in which the Maximum Annual Debt <br /> Service Requirements occur,the Net Pledged Revenues may be adjusted to reflect the Net <br /> Pledged Revenues which would have been produced had the modified rates been in effect <br /> throughout such Fiscal Year. <br /> Financial Plan <br /> The Financial Plan incorporates a Cash Flow Model that is intended to project the annual <br /> cash flow of the Water Enterprise fund.The Cash Flow Model and the associated"run" or <br /> "scenario" results show that it is possible to both provide for the needed capital <br /> expenditures and provide a financially sound Water Enterprise,based on the assumptions <br /> and parameters used. <br /> Key Assumptions, Parameters and Financial Criteria <br /> This section describes some of the key assumptions and parameters that were used to <br /> project rates and fees and which will be incorporated into the Utilities Financial Plan. <br /> Capital Plan and Associated Cash Flow Requirements <br /> The Model is based on the latest capital plan draft(dated November 2006)and incorporates <br /> the expenditures shown in Table 2 below. <br /> 26 <br />